The Marshall-Lerner condition asserts that if the sum of a country's elasticity of demand for imports and the foreign elasticity of demand for the country's exports equals 1.0, a depreciation of the country's currency will not affect its balance of trade.

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The statement is true. The Marshall-Lerner condition states that if the sum of a country's elasticity of demand for imports and the foreign elasticity of demand for the country's exports equals 1.0, a depreciation of the country's currency will lead to an improvement in its trade balance. If the sum is less than 1.0, a currency depreciation will worsen the trade balance, and if the sum is greater than 1.0, a currency depreciation will improve the trade balance.

The Marshall-Lerner Condition Asserts That If the Sum of a Country's